Whitehall may be rueing the law of unintended consequences this week after it emerged that an apparently minor legislative tweak could save developers billions of pounds in affordable housing contributions.
In the quiet weeks before Christmas the vacant building credit was inserted into the government’s national planning practice guidance. Where developers had to make an affordable housing contribution based on total floorspace when converting vacant buildings for residential use, the new guidance means councils should now only seek contributions on any increase in floorspace (p37).
Already one developer in Westminster has seen its expected £18m contribution halved, and the borough believes it could lose £1bn in payments a year. Once that ricochets through Wandsworth, Kensington & Chelsea and Hammersmith & Fulham, expect that bill to soar still further.
Cost wise, it’s good for developers, of course. But the change will have profound consequences for council budgets, affordable housing provision and developer reputations if it continues unchecked.
Let it be said that the motives behind the change are thoroughly laudable, as housing minister Brandon Lewis seeks to get more unused buildings back into productive use quickly. And it should provide a necessary financial incentive to achieve that aim outside of the capital.
But, as ever, it’s different in central London – and arguably in places like Croydon too, where there is a real appetite for converting under-utlisied city centre office towers into residential.
And it seems to me that there is a ready solution.
A precedent has been set on exempting certain areas from office-to-resi conversion requirements. Why not apply a similar principle here too? And quickly, before a council and a developer become embroiled in an unseemly, precedent-setting court case.
Unintended or not, the consequences of this particular legal change need to be addressed.
■ What will George do next?
That was the question on everyone’s lips this week after Canary Wharf became the latest London trophy asset to be snapped up by the Qataris. In endorsing the bid, the reverse ferret by Sir George Iacobescu and his board was at once surprising and inevitable, after it became clear that existing investors were yielding and no other suitors forthcoming.
Given that the board of Canary Wharf majority owner Songbird Estates resisted the overtures by the Qatar Investment Authority and Brookfield for so long, it is hard to imagine Iacobescu sticking around for the long haul. He may, of course, having overcome bigger hurdles than this one. But in the year of his 70th birthday, and after being said to be personally affronted by the 350p a share offer price, I wonder.
■ Speaking of overseas investors, Bristol, Birmingham and Leeds were all hoping to tap their wealth at an event at Downing Street on Tuesday morning. Cramming into the room were some 50 or so investors – domestic and global and, yes, Qatar was represented.
Bristol mayor George Ferguson’s trademark red trousers – and a whizzy video presentation – backed up the city’s pitch that it is independent, innovative and unorthodox. And the city should be, he told them, investors’ first stop outside an overheating London.
Birmingham council leader Sir Albert Bore and his LEP chairman Andy Street (yes, he of John Lewis) made no bones about how compelling they considered their case to be, entitling it “Backing a winner”. Leeds chief executive Tom Riordan, meanwhile, made much of the city’s award-winning shopping centre, offices and arena.
David Cameron wasn’t there, as had been expected, but more events are planned. If the government is serious about closing the economic gap between London and the UK’s other big cities, he should be at the next one – subject to his still being PM, of course. And if he’s not, his successor should ensure what seems to be a thoroughly worthwhile endeavour continues.
damian.wild@estatesgazette.com
